What Is The Value Of Stretch Objectives? Give An Example

1 What Is The Value Of Stretch Objectives Give An Example2 Provi

1. What is the value of stretch objectives? Give an example. 2. Provide some examples of company strategies that fit the actions listed in the figure. 3. Discuss rivalry among established firms in the industry -- and give examples. 4. Discuss - bargaining power of buyers -- and give examples. 5. Discuss - threat of substitutes -- and give examples. 6. Define RISK OF ENTRY (or threat of new entrants) and give an example. 7. Define, compare, and contrast competitive advantage with sustainable competitive advantage. 8. Provide real-world examples of companies with a competitive advantage or sustainable competitive advantage?

Paper For Above instruction

In the dynamic landscape of strategic management, understanding the concepts of stretch objectives, competitive strategies, industry rivalry, bargaining power, threats of substitutes, and the nuances distinguishing competitive advantage from sustainable competitive advantage is crucial for organizations aiming for long-term success. This paper explores these topics comprehensively, providing definitions, examples, and real-world applications to illustrate their significance in strategic decision-making.

1. The Value of Stretch Objectives

Stretch objectives are ambitious, challenging goals set by organizations that push performance boundaries beyond current capabilities. These objectives are valuable because they stimulate innovation, foster organizational growth, and motivate employees to achieve more than what is considered attainable under normal circumstances. They encourage companies to think creatively, improve processes, and explore new markets or products, thereby fostering a culture of continuous improvement.

An example of a stretch objective is Tesla’s goal to produce 20 million electric vehicles annually by 2030. This ambitious target has driven technological innovation, expanded manufacturing capacity, and shifted industry standards toward sustainability (Tesla, 2023). Such stretch objectives serve to energize the organization and position it ahead of competitors.

2. Examples of Company Strategies Aligned with Strategic Actions

Various strategic actions can be adopted by companies based on their specific circumstances. For instance, cost leadership strategies involve reducing operational costs to offer the lowest prices–an example being Walmart, which leverages economies of scale to provide low-cost goods (Hitt, Ireland, & Hoskisson, 2020). Differentiation strategies, aimed at providing unique products or services, are exemplified by Apple Inc., which emphasizes innovation and high-quality user experience.

Differentiation strategies include branding and product innovation, while focus strategies might concentrate on niche markets, exemplified by luxury brands like Louis Vuitton targeting high-income consumers. These strategic alignments enable companies to carve distinct market positions and foster competitive advantages.

3. Rivalry Among Established Firms

Industry rivalry pertains to the intensity of competition among existing competitors within a market. High rivalry often results in price wars, advertising battles, and increased product differentiation efforts. For example, in the airline industry, firms such as Delta, American Airlines, and United Airlines fiercely compete over routes, pricing, and service quality, which often leads to aggressive promotional campaigns and innovation in customer service (Porter, 1980).

Another example is the beverage industry, with Coca-Cola and PepsiCo continuously vying for market share through marketing, product innovation, and promotional strategies. Such rivalry influences market structures and impacts profit margins, necessitating strategic positioning and competitive differentiation.

4. Bargaining Power of Buyers

Buyers’ bargaining power is the ability of customers to influence pricing, quality, and terms of purchase. High bargaining power exists when buyers are concentrated, purchase in large volumes, or have many alternatives. For instance, large retail chains like Walmart possess significant bargaining power due to their volume buying, enabling them to demand lower prices from suppliers (Porter, 1985).

Conversely, individual consumers in the luxury car market have less bargaining power because of fewer alternative options and the uniqueness of the products. Understanding buyer power helps firms develop strategies to retain customers and differentiate their offerings to reduce price sensitivity (Baker, 2014).

5. Threat of Substitutes

The threat of substitutes refers to the risk posed by alternative products or services that can perform the same function. For example, in the transportation sector, electric bikes and scooters serve as substitutes for traditional cars in urban commuting, affecting automobile sales (Porter, 1979).

In the technology industry, cloud storage services like Dropbox and Google Drive are substitutes for physical storage devices, impacting hardware manufacturers. The availability of substitutes limits industry profitability and compels firms to innovate and differentiate to retain customers.

6. Risk of Entry (Threat of New Entrants)

The risk of entry involves the potential for new competitors to enter the industry and erode the market share of established firms. Barriers to entry, such as economies of scale, high capital requirements, and brand loyalty, influence this risk. For example, the banking sector has high barriers due to regulatory requirements, making it difficult for new entrants to establish a foothold (Porter, 1980).

An example of low entry barriers is the online retail space, where companies like Amazon have faced relatively low barriers due to digital platform accessibility, leading to increased competition.

7. Competitive Advantage vs. Sustainable Competitive Advantage

Competitive advantage refers to an organization's ability to perform at a higher level than competitors by offering greater value, often through cost leadership or differentiation. Sustainable competitive advantage, however, is a long-term, unique position that rivals find difficult to imitate, providing continued superiority (Barney & Hesterly, 2019).

While competitive advantage can be temporary, sustainable advantage is rooted in resources or capabilities that create barriers for competitors, such as patents, brand reputation, or proprietary technology. For example, Google's dominance in search engine technology provides a sustainable competitive advantage due to its extensive data and innovative algorithms.

8. Examples of Companies with Competitive or Sustainable Competitive Advantages

Apple Inc. exemplifies a company with a sustainable competitive advantage, owing to its brand loyalty, ecosystem integration, and innovation capacity (Lashinsky, 2012). Samsung maintains a competitive advantage through extensive patent portfolios and manufacturing scale, although the sustainability is periodically challenged by competitors.

Another example is Amazon, which sustains its competitive advantage through superior logistics, vast product selection, and data-driven customer insights, enabling long-term dominance in e-commerce. Such companies leverage resources and strategies to maintain their competitive edge over time.

Conclusion

Understanding the strategic concepts of stretch objectives, industry rivalry, bargaining power, substitutes, entry risks, and competitive advantages is essential for firms aspiring to sustain growth and profitability. Firms that set ambitious stretch goals can inspire innovation and organizational excellence, while strategic positioning, resource management, and understanding industry dynamics allow for development of both competitive and sustainable advantages. Real-world examples demonstrate that successful organizations continuously adapt and leverage their unique capabilities to outperform rivals and maintain long-term success.

References

• Baker, M. J. (2014). Marketing strategy and management. Palgrave Macmillan.
• Barney, J. B., & Hesterly, W. S. (2019). Strategic management and competitive advantage: Concepts and cases. Pearson.
• Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2020). Strategic management: Concepts and cases: Competitiveness and globalization. Cengage Learning.
• Lashinsky, A. (2012). Inside Apple: How America's most admired--and secretive--company really works. Hachette UK.
• Porter, M. E. (1979). How competitive forces shape strategy. Harvard Business Review, 57(2), 137-145.
• Porter, M. E. (1980). Competitive strategy: Techniques for analyzing industries and competitors. Free Press.
• Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. Free Press.
• Tesla. (2023). Tesla Annual Report. Retrieved from [Tesla's official website]